By: Jean Paolo
G. Lacap
At
long last, I, together with my Junior Managers and Entrepreneurs’ Society of
the Philippines (JMESP) students and the CBA Honor Society (HONSOC) officers,
were able to push through the first ever Financial
Literacy Seminar specifically on topics on Mutual Funds and Stock Market last January 21, 2015 at Angeles
University Foundation. Through a good friend from UP, I was able to invite two
great young “financial souls” – Sir Floi
Wycoco and Sir JB Noynay, both
Filipino financial literacy advocates.
The literacy rate in the Philippines is very high as
compared to other countries but when it comes to financial literacy, I guess we
are quite backwards. Here’s my post analysis from Sir Floi’s and Sir JB’s
financial literacy presentations.
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| Sir Floi's Presentation on Mutual Funds |
On Education and Saving
In
a typical Filipino family, education is considered an important asset.
Filipinos generally believe that education is the primary key to unlock the
family from social ills such as poverty. They believe that having a good
education makes anyone affluent, and I generally agree with that idea! What is
sad about the Filipino mentality with regard to education is, they see
education as a vehicle to become an employee to earn a living instead of
looking it in a much bigger view.
One
of the most neglected topics among Filipinos, young and old, is financial
awareness particularly on saving and investing. Most of us, if we have spare
cash, we either use them to buy things we want and/or sometimes save them,
typically in a bank. We see banks as institutions in which it can safeguard our
hard-earned money. We typically see saving in a bank as a better way to secure
the future. We often give less consideration in investing our money in other
ways such as in mutual funds or in the stock market. Thus, we often forget the
possible impact of inflation on our saved money. For example, if you save
Php100,000 in a bank, and let say the interest on saving is 1% (which is the
normal rate) per annum, your money after 1 year will be Php101,000 (Php100,000
x 1.01). Let’s assume the inflation rate today, roughly 4.5%. By simply looking
the figures, the inflation rate is bigger that the interest on saving which
means, after a year, you are losing 3.5% (4.5% - 1%) or Php3,500 of the value
of your money! Thus, in order for us to offset the negative impact of
inflation, saving should be translated to investment or simply S = I (saving
equals investment), a basic concept in economics.
Facts and Figures
Let’s
get some facts first. Based on the data presented by Mr. Floi Wycoco in the
Financial Literacy Seminar held last January 21, 2015, only 20% of the Filipinos
have savings account. Only 234,854 retail and institutional accounts invest in
mutual funds. And only 221,927
retail and institutional accounts invest in Unit Investment Trust Fund (UITF).
These figures reflect the low level of involvement of Filipinos in investing.
Comparing to other neighboring Asian countries, our country has low level of
participation in investing activities.
What
would be the possible reasons why Filipinos are afraid to invest, whether in
mutual funds and/or stock market? One reason is basically taking risk.
Filipinos generally believe that investing their money in mutual funds and/or
stock market is too risky. Another is, they believe that investing is only for
financial geniuses! They see mutual funds or stock market as something that is
alienating, something that utilizes jargons that are unimaginable! And the last
is the fact the most Filipinos wants instant return that’s why some fall into
traps of illegal multi-level marketing / pyramiding scams! These illegal
“investment” activities typically offer inconceivable return or quick cash in a
lesser span of time! And what is the solution to all these problems and
reasons? FINANCIAL LITERACY!
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| Sir JB and Sir Floi during the Seminar's Open Forum |
Advocacy on Financial Literacy
Today
is the right time for every Filipino to attain financial freedom through
financial literacy advocacies. I am very glad that there are Filipino groups
such as The Global Filipino Investors (TGFI)
that promote financial literacy among Filipino families here and abroad and
among Filipino students and youth. It is also the right time to support this
kind of advocacies. As what Sir Floi said “Financial education is what we need
to become a better nation.” This is also a challenge on my part as a business educator
of this country. I need to take part of this call.
While writing
this article, I realized that one of the things that business educators tend to
forget, how to teach business students to be financially equipped through
actual/practical applications of financial concepts like mutual funds and stock
market participation. It is quite sad that our exposure to these investment
concepts is quite less as compared with other countries abroad. But definitely,
I still believe that it is not yet late to support and advocate financial
literacy. This is one of the keys to help our economy flourish. As what Sir JB
said in his presentation, "When you invest in stocks, you are investing in
the Philippines. You are contributing to the economy of the country.” Start
opening our doors to financial literacy and have an open mind to investing
either in mutual funds or stock market. Start learning! Attend legit financial
literacy seminars! Let’s make this country a better nation, one step at a time!
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| L-R: Nicole Demerin (JMESP President), Me (JMESP Adviser), Sir JB, Sir Floi, Dr. Anne Tungcab (CBA HONSOC Adviser), Darriel Mendoza (CBA HONSOC President) |
